The Graduate Management Review

SHRM Best-Practices & Sustainable Competitive Advantage: A Resource-Based View Hamish G. H. Elliott * Abstract
Three dominant perspectives have emerged within Strategic HRM: the Universalistic, Contingency, and Configurational perspectives. The Universalistic perspective, as espoused particularly by Pfeffer (1994a; 1995; Pfeffer & Veiga, 1999), proposes that a universal set of HRM best practices can be employed to attain and sustain competitive advantage. Using the principles of the Resource-Based View of competitive advantage, this paper critiques the universalistic perspective and proposes that HR practices cannot by themselves be a source of sustained competitive advantage, as it is virtually impossible for HR practices to be rare, inimitable, and non-substitutable. Instead, the Configurational perspective is proposed as a more theoretically valid and tenable approach to strategically managing human resources for sustainable competitive advantage. This is because the Configurational approach promotes a system of HR practices that are customised to suit a particular firms competitive strategies, and internal practices, policies, and resources it provides both vertical and horizontal fit. It is also found that human capital is the foundation of HRM and competitive advantage. Over the last twenty years the field of human resource (HR) management has undergone immense paradigmatic growth and broadening by popular interest from both academics and practitioners (Delery & Doty, 1996; Wright, McMahan, & McWilliams, 1994). In effect, what were micro-perspective personnel management practices have transformed into a macro or strategic perspective by academic desire to demonstrate the importance of human resource practices for organisational performance (Delery & Doty, 1996). The basic premise underlying what is termed strategic human resource management (SHRM), is that for competitive advantage, firms pursuing a particular strategy require HR practices that are different from those required by firms pursuing alternative strategies (Barney & Wright, 1998; Boxall, 1998; Coff, 1997; Delery & Doty, 1996; Jackson & Schuler, 1995; Mueller, 1996; Schuler, 1992; Schuler, Dowling, & De Cieri, 1993; Schuler & Jackson, 1987a, 1987b; Tichy, Forbrun, & Devanna, 1982; Wright & McMahan, 1992; Wright et al., 1994). Human resources are defined as the pool of human capital under the firms control in a direct employment relationship, and HR practices are the organisational activities directed at managing the pool of human capital and ensuring that the capital is employed towards the fulfilment of organisational goals (Wright et al., 1994). Delery and Doty (1996) suggest that if this fundamental assumption is true, then it would account for variance in HR practices as attributable to differing firm strategies, and that firms possessing greater congruency between their HR practices and strategies should enjoy superior performance. Paradoxically, however, some HR practitioners and academics are strong proponents of the recent contrasting concept of best practice HRM, which is grounded on a seemingly Tayloristic assumption that there is one best way of managing human resources for effective performance. Within the SHRM paradigm various perspectives have grown around the concept of HR practices.

* This assignment was for MANT407, Advanced Human Resource Management. Supervised by Dr Fiona Edgar

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Strategic human resource management perspectives

Ferris, Hochwarter, Buckley, Harrel-Cook and Frink (1999) and Delery & Doty (1996) report that the academic theorising of SHRM is relatively trichotomous in that three perspectives have emerged: the universalistic perspective, contingency perspective, and configurational perspective. SHRM authors who ascribe to the universalistic perspective advocate a best practice approach to SHRM and propose that some HR practices are always better than others and that all organisations should adopt these practices (Brockbank, 1999; Fitz-enz, 1997; Geringer, Frayne, & Milliman, 2002; Hitt, Hoskisson, Harrison, & Summers, 1994; Huselid, 1995; Martin & Beaumont, 1998; Pfeffer, 1994a, 1994b, 1995; Pfeffer & Veiga, 1999; Terpstra, 1994; Truss, 2001). A second group of researchers ascribe to a contingency perspective and argue that for a firm to be effective, its HR practices and strategy must be aligned with other aspects and strategies of the firm (Arthur, 1994; Sanz-Valle, Sabater-Sanchez, & Aragon-Sanchez, 1999; Schuler & Jackson, 1987a; Sparrow, Schuler, & Jackson, 1994; Youndt, Snell, Dean, & Lepak, 1996). Adopting the concept of synergy, Schuler & Jackson (1987a) propose that if HR practices are not synergistic or consistent with firm strategies, then they can be more competitively disadvantageous than advantageous by inhibiting both individual and firm performance. A third group of researchers ascribe to a configurational approach to SHRM, proposing that it is the pattern of HR practices that contribute to firm performance and goal attainment (Brockbank, 1999; Delery & Doty, 1996; Ferris et al., 1999; MacDuffie, 1995; Wright & McMahan, 1992). In order to be effective, configurational theorists propose that firms must develop an HR system that achieves both horizontal and vertical fit (Delery & Doty, 1996). Horizontal fit is achieved when there is internal consistency between the firms HR policies and practices, and vertical fit depicts the level of congruence of the HR system with other firm characteristics, especially firm strategies (Delery & Doty, 1996). With specificity to the fundamental assumption of SHRM, the trichotomous nature of the paradigm poses a paradox that both Delery and Doty (1996) and Ferris et al. (1999) report is receiving strong criticism for its theoretical deficiency and lack of empirical validity. Wright and McMahan (1992) and Wright et al. (1994) address this issue from the configurational perspective by reminding us of the strategic component of SHRM and its paradigmatic lineage from strategic management theory, by advocating a strategic-theoretical analysis of the competitiveness of SHRM through the resource-based view determinants of competitive advantage. The resource-based view of the firm (Amit & Schoemaker, 1993; Barney, 1991; Collis & Montgomery, 1995; Conner, 1991; Grant, 1991; Hall, 1992; Peteraf, 1993; Wernerfelt, 1984) differs from the more environmentally focused strategy paradigm of the industry structure view (e.g. Porter, 1980, 1985) as it is firm-focused and emphasises the links between the firms idiosyncratic resources, its strategy and its performance (Wright et al., 1994). Firstly, internal resources and capabilities are viewed as the key competitive sources of a firms strategy; and secondly, the majority of the firms superior returns are derived from these (Barney, 1991; Chamberlin, 1962; Collis, 1991, 1994; Collis & Montgomery, 1995; Conner & Prahalad, 1996; Grant, 1991; Peteraf, 1993).

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While there is unanimous agreement that firms sustain competitive advantage from many different and unique resources and strategies1, it is evident that the majority of leading firms have one unique resource in common people (Barney & Wright, 1998; Pfeffer, 1995; Wright et al., 1994). Within the SHRM paradigm, there is significant support of the resourcebased view as a tool of competitive advantage analysis of human capital (Barney & Wright, 1998; Becker & Gerhart, 1996; Boxall, 1996, 1998; Coff, 1997; De Saa-Perez & GarciaFalcon, 2002; Jackson & Schuler, 1995; Khatri, 2000; Lado & Wilson, 1994; Mueller, 1996; Schuler et al., 1993; Swiercz & Spencer, 1992; Wright & McMahan, 1992; Wright et al., 1994). This paper adopts the resource-based view as its tool of analysis and through its determinants of competitive advantage, supports the configurational perspectives rejection of the universalistic perspective of SHRM by proposing and demonstrating that a universal typology of HR best-practices offers no competitive advantage to a firm. Instead, it is proposed that firms should take a configurational approach to SHRM and develop an HR system that achieves both horizontal and vertical fit within the firm and fosters sustainable competitive advantage from the firms human resource capital pool. With specificity to the configurational perspective of HR practices, the RBV is more idiosyncratically focused as opposed to an externality focus. However, intuitively, a firms value creation emanates from the fit of internal capabilities to the strategy pursued, and its relationship with the competitive environment (Spanos & Lioukas, 2001). Barney & Zajac (1994) propose that competitive strategising with resources and capabilities cannot be understood independently of strategy content and the external environment (industry structure) within which the firm exists, and it is on this assumption that this paper is based. Schuler et al. (1993), Huselid (1993), Schuler & Jackson (1987b), Boxall (1996; 1998), and Jackson & Schuler (Jackson & Schuler, 1995) present discussions more related to the industry structure-based fit of HR practices with competitive strategy. While the configurational perspective promotes both internal and external strategic fit, the resourcebased view, as evidenced, provides a stronger conceptual framework of analysis and is thus utilised in this paper. First, the notion of HR best-practice within the universalistic perspective is examined. Second, a summary of the resource-based view of sustained competitive advantage is presented and then competitive advantage of human resources is examined. Last, the notion of universal best-practice is examined within the resource-based view framework of competitive advantage.

HRM & performance: The universalistic perspective

Within the body of HR research, there is significant empirical evidence linking certain HR practices to firm performance and recent research suggests that bundles, or systems, of HR practices are more influential than individual practices working in isolation (Arthur, 1994; Huselid, 1995; MacDuffie, 1995; Youndt et al., 1996). Arthur (1994) found that HR practices that focused on enhancing employee commitment (e.g., decentralised decision making, comprehensive training, salaried compensation, employee participation) were related to higher performance. In a similar study, Huselid (1995) found that investments in HR activities such as incentive compensation, selective staffing techniques, and employee participation, developed employee skills and motivation and resulted in reduced turnover, increased productivity, and increased firm performance (Youndt et al., 1996). MacDuffie (1995) found
1

For example: Quality Customer Service, Innovative Research & Design, Lean Manufacturing etc.

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that flexible production plants with team-based work systems and high-commitment HR practices (such as contingent compensation and extensive training) consistently outperformed mass production plants and that bundles of practices result in higher performance. Further empirical studies support the links between HR practices and firm performance (Boselie, Paauwe, & Jansen, 2001; Boxall & Steeneveld, 1999; Fey, Bjorkman, & Pavlovskaya, 2000; Gratton, Hope-Hailey, Stiles, & Truss, 1999; Huang, 2000; Huselid, Jackson, & Schuler, 1997; Richard & Johnson, 2001; Sanz-Valle et al., 1999; Truss, 2001). Founded on these empirical studies, the universalistic perspective proposes that some HR practices are always better than others and that all organisations should adopt this best practice approach to SHRM (Brockbank, 1999; Fitz-enz, 1997; Geringer et al., 2002; Hitt et al., 1994; Huselid, 1995; Pfeffer, 1994a, 1994b, 1995; Pfeffer & Veiga, 1999; Terpstra, 1994; Truss, 2001). Table 1 Best-Practice Approaches to SHRM
Arthur (1992) Broadly defined jobs Employee participation Formal dispute resolution Information sharing Highly workers skilled Information sharing Participation and empowerment Self-managed teams Training and skill development Cross-utilisation & cross-training Symbolic egalitarianism Wage compression Promotion from within Information sharing Attitude assessment Labour/management participation Recruiting intensity Training hours Salaried workers Stock ownership Promotion criteria (seniority vs. merit) Training of new employees Training experienced employees of Pfeffer (1995) Employment security Selectivity recruiting High Wages Incentive Pay Employee ownership in Huselid (1995) Personnel selection Performance appraisal Incentive compensation Job design Grievance procedures MacDuffie (1995) Work teams Problem-solving groups Employee suggestions Job rotation Decentralisation Recruitment Hiring Contingent compensation Status differentiation & Comparatively high compensation contingent on organisational performance Extensive training Reduction status differences Sharing Information of Pfeffer & Veiga (1999) Employment security Selective hiring Self-managed teams and Decentralisation

Self-managed teams Extensive skills training High wages

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Leading the case for the universalistic perspective, Jeffrey Pfeffer (1994a; 1994b; 1995; Pfeffer & Veiga, 1999), proposes that while the exact number is arbitrary, there is a set of interrelated HR practices that characterise achieving competitive success through HR management (Pfeffer, 1995). However, from a scholarly perspective, Pfeffers broad utopian claims seem unsubstantiated and lacking in empirical validity, drawing criticism from Purcell (1999), Guest (1997), and Becker & Gerhart (1996). His statement that the practices emerge from extensive reading of both the popular and academic literature, talking to numerous people in firms in a variety of industries, and the application of some simple common sense (Pfeffer, 1995, p. 57) does not lend itself to the scholastic rigour of empirical validity. However, in a later paper, Pfeffer & Veiga (1999) present a stronger empirical case, based on several empirical studies, and propose seven HR practices of successful organisations. Further empirically based universalistic cases are presented by Arthur (1992), Huselid (1995), and MacDuffie (1995). A summary of these HR best-practices is provided in Table 1. Pfeffer (1995) makes the bold statement that these practices do not necessarily need to be contingent on a firms particular competitive strategy, yet he also asserts that this set of best practices will lead a firm to competitive advantage. It is ambiguities and contradictions such as this, that from a strategic HRM theoretical position, belie the universalistic perspective as being confused and rather unempirically utopian. Pfeffer (1994a; 1994b; 1995; Pfeffer & Veiga, 1999) argues that universal practices will result in competitive advantage, yet makes no interconnection with commonplace competitive strategy theory. Sparrow et al. (1994) do utilise a competitive strategy foundation by using Porters (1980; 1985) competitive strategy paradigm to propose inter-relatedness of the universalistic and contingency perspectives in firm competitive strategy. However, while universalistic proponents espouse resultant competitive advantage and self-classify as being strategic, what this perspective lacks is congruence with the dominant resource-based view of competitive advantage. Sparrow et al. (1994) along with Huselid (1995), Youndt et al (1996), and Truss (2001) all define and mention the importance and existence of the resource-based view of competitive advantage, yet fail to utilise it to conceptualise their proposed best-practice theory within its framework. From reviewing the literature it is evident that those strategic HR scholars who fully understand the resource-based view of competitive advantage realise the inconsistencies and anomalies between it and the universalistic perspective of HR practice, and it is these scholars who instead propose the configurational perspective of HR practice.

The resource-based view of competitive advantage

Over the last twenty years, protagonists of the resource-based view of competitive advantage have produced an increasing amount of empirical research substantiating their espoused theories that the resources and capabilities of the firm are the foundation for its long-term strategy because of two premises. First, internal resources and capabilities are viewed as the key competitive sources of a firms strategy; and secondly, the majority of the firms superior returns are derived from these (Barney, 1991; Chamberlin, 1962; Collis, 1991, 1994; Collis & Montgomery, 1995; Conner & Prahalad, 1996; Grant, 1991; Peteraf, 1993). The resource-based view defines competitive advantage as when a firm is implementing a value creating strategy not simultaneously being implemented by any current or potential competitors (Barney, 1991). This assumes a firms competition includes all current competitors, but also, potential competitors. Within this definition, a firm can create short run competitive advantage or first-mover advantage (Barney, 1991). However, it is not sustainable because other competitors may be able to imitate or purchase the sources of the advantage (Amit & Schoemaker, 1993; Barney, 1991; Collis & Montgomery, 1995).

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Sustained competitive advantage is achieved when a firm is implementing a value creating strategy not simultaneously being implemented by any current or potential competitors and when these other firms are imperfectly able to imitate the benefits of this strategy (Barney, 1991). Firm resources are defined as including all assets, capabilities, organizational processes, firm attributes, information, knowledge, etc. controlled by a firm that enable it to conceive of and implement strategies that improve its efficiency and effectiveness (Daft, 1983, cited in Barney, 1991, p. 101). These are categorised as physical capital resources, human capital resources, organisational capital resources (Becker, 1964, Williamson, 1975, Tomer, 1987, cited in Barney, 1991), and financial resources, technological resources, and reputation (Amit & Schoemaker, 1993; Grant, 1991). To sustain competitive advantage from a firms idiosyncratic resources, Dierickx & Cool (1989) propose the notion of asset stock accumulation. They argue that if resources are freely available on an open strategic factor market, as proposed by Barney (1986b), then anyone can attain the resource and potentially use it to achieve the same/or better results, unless the resource is limited by supply. Conversely, a more favourable approach to sustainable competitive advantage is the use of intangible (or tacit) resources that are generally built rather than bought (Dierickx & Cool, 1989). Strategic assets are the cumulative result of adhering to a set of consistent policies over a period of time, that is, strategic asset stocks are accumulated by choosing appropriate time paths of flows over a period of time (Dierickx & Cool, 1989; Hall, 1992, 1993). For example, a reputation for quality may be built (rather than bought) by following a consistent set of production, quality control etc. policies over some period of time (Dierickx & Cool, 1989). It is proposed that human resources are a strategic asset capable of providing or contributing to a firms competitive advantage (Barney & Wright, 1998; Becker & Gerhart, 1996; Boxall, 1996, 1998; Coff, 1997; De Saa-Perez & Garcia-Falcon, 2002; Jackson & Schuler, 1995; Khatri, 2000; Lado & Wilson, 1994; Mueller, 1996; Schuler et al., 1993; Swiercz & Spencer, 1992; Wright & McMahan, 1992; Wright et al., 1994). To have the potential of sustained competitive advantage, the resource-based view proposes that a firm must have four attributes: (1) valuable resources; (2) rare resources; (3) imperfectly imitable resources; and (4) nonsubstitutability of resources (Barney, 1991; Collis & Montgomery, 1995; Conner & Prahalad, 1996).

Sustainable competitive advantage and HR

Before the competitive advantage of HR practices can be examined, the sustainable competitive advantage potentiality of human resources must be established. This is provided within the resource-based framework.

Human capital resources as valuable

Firstly, in order for human resources to be a source of sustained competitive advantage congruent with Barneys (1991) criteria, they must provide value to the firm. Steffy and Maurer (1988) provide an economic-based theoretical proposition that both the demand and supply of labour are heterogeneous in that firms require different jobs that require different skills, and that individuals differ in both the types and level of their idiosyncratic skills. Thus, there is variance in individuals contribution to the firm and consequently, the ability for human capital to provide value (Wright et al., 1994).

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The Graduate Management Review Human capital resources as rare

Secondly, a resource must be rare if it is to be a source of sustained competitive advantage (Barney, 1991). Contradictory to the notion of the rarity of human resources, it could be argued that the labour supply pool is in fact homogenous due to the existence of unemployment, which consequentially, suggests an excess supply of labour (Wright et al., 1994). However, strategic HRM scholars propose that the rarity of human capital is derived from their skill and competency level, and based on the assumption that skills, competencies, and capabilities are normally distributed through the population, high quality and ability workers/resources are thus rare (Wright et al., 1994).

Human resources as inimitable

Thirdly, a resource must be inimitable to be a source of sustained competitive advantage (Barney, 1991). Firstly, for human resources to be imitated, competitors must be able to identify the exact source of the human capital pool that provides the advantage. Secondly, the competitor must be able to duplicate exactly both the relevant components of the human capital resource pool and the circumstances under which these resources function (Wright et al., 1994). Congruent with the resource-based view of competitive advantage paradigm, SHRM scholars propose that high quality human resources can be imperfectly imitable due to the existence of three requisite concepts: unique historical conditions, causal ambiguity, and social complexity. It is through the combination of these concepts plus imperfect resource mobility that sustained competitive advantage can be attained and value created (Wright et al., 1994). Firstly, the firms human capital pool must have unique historical conditions (Amit & Schoemaker, 1993; Barney, 1991; Grant, 1991) that have developed over time as the firm has developed (Barney, 1986a; Fiol, 1991), are aligned with the firms strategy (Wright et al., 1994) and been influenced by the values, underlying assumptions, culture, and unique personalities of the organisations leaders (Kotter & Heskett, 1992). Secondly, the link between the firms human capital pool and competitive advantage may be causally ambiguous (Amit & Schoemaker, 1993; Barney, 1991; Grant, 1991; Peteraf, 1993; Prahalad & Hamel, 1990; Wright et al., 1994) in that the firm itself knows the link and is able to sustain competitive advantage, but other firms cannot identify or ascertain, and thus, cannot imitate. Thirdly, the human capital pool may be socially complex in its social networks, interrelationships, and functioning (Amit & Schoemaker, 1993; Barney, 1991; Grant, 1991; Prahalad & Hamel, 1990; Wright et al., 1994), and hence virtually impossible to imitate and replicate. Thus, theoretically, competitive advantage derived from human capital may be imitable, but only if a competitor can identify and replicate the exact historical conditions, causes, social network structures, interactions, inter-relationships, and personalities that exist within the firm and contribute to its competitiveness. However, due to the many organisational contingencies that exist within firms, this is realistically highly improbable (Wright et al., 1994). Further, to sustain competitive advantage, human resources must also be imperfectly mobile (Amit & Schoemaker, 1993; Grant, 1991; Peteraf, 1993) in that they cannot be traded. Their non-tradability renders them less valuable to other users so they cannot be readily coerced from their employer through financial means. While human resources as individuals can be traded, the human capital as an entity cannot be traded. Because this is produced by a mix

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of organisational culture, firm capabilities, and integrated firm strategies and HR strategies, the advantage derived from human capital remains bound to the firm and available for use over the long run because of its unique historical conditions, social complexity and causal ambiguity, and therefore, cannot be traded (Dierickx & Cool, 1989; Peteraf, 1993; Wright et al., 1994). Firm-specific resources that cater for specialised needs, such as human resources trained in firm-specific skills, may be tradable, but are of greater value to the firm that currently employs them than to others (Dierickx & Cool, 1989; Peteraf, 1993).

Human capital resources as non-substitutable

Fourthly, if a resource is to derive sustained competitive advantage it must not have substitutes (Barney, 1991). Imperfect substitutability, requires that there must be no strategically equivalent valuable resources that are themselves either not rare or imitable (Barney, 1991, p. 111). If alternative resources are either not rare or imitable, then other firms will be able to conceive and implement similar strategies from the resource, nullifying the existence of competitive advantage (Barney, 1991). The strongest advantage of human resources is the fact that in terms of predisposed genetic uniqueness, no two people are exactly identical and thus they are a heterogeneous resource (Fiol, 1991) and capable of sustaining competitive advantage (Barney & Wright, 1998; Pfeffer, 1995; Pfeffer & Veiga, 1999; Schuler & Jackson, 1987a; Wright et al., 1994). This resource-based framework of analysis has provided the theoretical conceptualisation of how human resources can provide a firm with, or contribute towards, sustained competitive advantage. It has provided a theoretical structure to underlie the empirical findings indicative of this link. However, within this framework, how do we then theorise the role and the competitive advantage potentiality of HR practices? The universalistic perspective advocates a best practice approach, proposing that some HR practices are always better than others and that all organisations should adopt these practices. However, are these practices far too common and well known to constitute a form of advantage, lacking the requisite resourcebased view determinants of sustainable competitive advantage (Boxall, 1996; Wright et al., 1994)?

Human resource practices and sustained competitive advantage

So far, this paper has established and recognised both the theoretical and empirical links between HR practices and positive performance results, and the importance and valuecreation capability of HR practices within a firm. However, from a resource-based view, it is proposed that HR practices cannot by themselves be a source of sustained competitive advantage, as it is virtually impossible for HR practices to be rare, inimitable, and nonsubstitutable. For example, training programmes, performance evaluation systems, and compensation systems are readily available to be purchased on what Dierickx & Cool (1989) propose are strategic factor markets. Thus, from a resource-based perspective, HR practices, theoretically, have little potential for being a source of sustained competitive advantage (Wright et al., 1994). Therefore, the source of sustained competitive advantage lies in the human resources themselves, not the practices used to attract, utilise, and retain them (Boxall, 1996; Wright et al., 1994). Therefore, the universalistic perspective of HR practices is theoretically inadequate and untenable. However, this is not to ignore the importance of HR practices in developing human resources as a source of sustained competitive advantage. Instead, it is proposed that the configurational perspective of HR practices is a more theoretically valid and tenable approach to strategically managing human resources for sustainable competitive

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advantage. This is because the configurational approach promotes a system of HR practices that are customised to suit a particular firms competitive strategies, and internal practices, policies, and resources it provides both vertical and horizontal fit. In support of Wright et al. (1994) and Boxall (1996), it is proposed that although HR practices are not themselves sources of sustained competitive advantage, their role in developing sustained competitive advantage from human resources is still fundamental. The universalistic perspectives notion of best practices is perhaps more of a set of guiding principles, or a systemic architecture (Becker & Gerhart, 1996), while the specific policies and practices that underlie a guiding principle may be more situational-based (Stroh & Caligiuri, 1998). Becker & Gerhart (1996) suggest that a best HR system architecture may exist, but for superior performance, the bundles or configurations of practices and policies implemented in a firm must be aligned both vertically and horizontally within the firm. That is, they must be aligned with each other as well as the firms competitive strategies and other functional policies and practices. This approach to utilising HR practices is more congruent with the resource-based view of competitive advantage as the practices are used systemically to develop and control the human resource pool, and moderate the relationship between this pool and sustained competitive advantage by effecting HR behaviour. This is depicted in Figure 1 as proposed by Wright et al. (1994).

Human Resource Practices

Human Capital Pool

Human Resource Behaviour

Sustained Competitive Advantage

Figure 1 A Model of Human Resources as a Source of Sustained Competitive Advantage (Wright et al., 1994) With specificity to Figure 1, firstly, managers can develop the human capital pool by utilising HR practices such as the development of selection, appraisal, training, and compensation systems to attract, identify, and retain high quality employees (Wright et al., 1994). Secondly, HR programmes such as extensive recruitment systems and attractive compensation packages, can be used to attract and retain employees with the highest ability, quality and best organisational-fit (Wright et al., 1994). Thirdly, training programmes aimed at increasing and developing individuals skills and competencies provide continuing skill development of a firms human capital pool (Wright et al., 1994). From Wright et al.s (1994) model, the next aim of HR practices is to influence individual behaviour that is supportive of the firms competitive strategy. Schuler (1992) proposes that this can be achieved by developing reward systems, communication systems, training programmes, and socialisation systems which encourage employees to act in the interest of the firm. This is imperative, as the potential of human resource capital is realised only to the

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extent that the individual employees choose to allow the firm to benefit from the capital through their behaviour (Wright et al., 1994). This resource-based view provides support for the case for a configurational approach as this moderating role may explain the wide variance of high and low success and performance achieved by firms who adopt common HR practices such as selection, training, and knowledge-based pay. Firms can take a universalistic perspective and imitate practices that appear to make other firms successful, but it is only through the configurational use of these human resource practices in a unique context that human resources can be developed as a source of sustained competitive advantage (Wright et al., 1994). Wright et al. (1994) suggest that the source of differential success of the same HR practices between firms results from differing human capital pools existent within the various firms. Some role behaviours require superior human capital, and if the required HR system does not support this, then the required behaviours will not be elicited and no sustainable competitive advantage cultivated. This is again illustrative of the proposition that the relationship between HR practices and competitive advantage is contingent upon the human capital pool, not the practices themselves. Thus, from a resource-based perspective, firms desiring competitive advantage cannot expect to purchase or imitate sustained competitive advantages through the acquisition of a universalistic set of best practices. A firm must take a configurational perspective and create a system of HR practices that are customised to suit a particular firms competitive strategies, and internal practices, policies, and resources provide both vertical and horizontal fit. That way, advantages may be found in the rare, imperfectly imitable, and non-substitutable resources already controlled by the firm (Dierickx & Cool, 1989). Wright et al. (1994) conclude that the role of the HR manager then, is to recognise, develop and exploit the resources within the firm through the application of HR systems that develop the human capital pool and elicit employee behaviour supportive of a firms competitive strategy.

Conclusion
This paper has examined the propositions of the SHRM perspectives of HR practices and their contribution to sustainable competitive advantage. The link between HR practices and firm performance has been established and from a resource-based view, it has been demonstrated that human resources can potentially be a source, or contributor, of a firms sustainable competitive advantage. On the theoretical factors of rareness, inimitability, and non-substitutability, the universalistic ideal of HR best practices cannot provide a sustainable competitive advantage. From this framework, it has been demonstrated that the configurational perspective provides a more theoretically valid and tenable approach than the universalistic perspective for using HR practices to develop the human resource capital pool into a source of sustainable competitive advantage.

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